Congress first proposed a national sales tax in 1999, and each consecutive session of Congress has seen a proposed national sales tax, including this year’s 2023 Fair Tax Act sponsored by Rep. Buddy Carter (R-GA). House Speaker Kevin McCarthy is pushing to bring the bill to a vote, but, as with all prior national sales tax proposals, it seems doomed to failure. President Biden and his Democrat colleagues have made it clear they stand opposed to the Republican-sponsored Fair Tax Act.
What, if any benefits, would there be if a national sales tax became law? First and foremost, no one would have to file those complicated federal income tax forms every year. “Yay!” would be most people’s response to this — unless you make your bread and butter as an income tax preparer. The present Fair Tax Act proposes a 23% tax on all goods and services. So, for example, if you bought an item priced at $100 you would pay an additional $23 in federal sales tax, on top of whatever state and local taxes you’d have to pay, depending on the state in which you made your purchase.
A national sales tax is, simply, based solely on how much an individual spends. Currently, federal income tax rates start at 10% for the lowest yearly income and ascend up to 37% for those making nearly $216,000 or more a year. If based on consumption instead of income level, lower income individuals and households which don’t have a lot of discretionary spending ability would receive a tax break with a national 23% sales tax. Higher income individuals and households which have and generally exercise higher spending ability would pay more in a national sales tax system. Foreign tourists would also pay the same 23% tax on goods and services while here in the U.S., adding to the tax revenue collected for the federal government.
Pay checks would be significantly higher since federal withholding taxes would be eliminated, which equates to both more saving ability and more spending ability for all income levels. Since a national sales tax would be based on the purchase of goods and services, various analysts estimate that the Gross Domestic Product would receive a boost anywhere from 2-10%. Not too shabby.
A significant benefit of having a national sales tax would be the elimination of a slew of complicated and ever-changing tax codes and tax rates. The IRS, with all of its current inefficiencies, would cease to exist. The dreaded IRS audit would also cease to exist or be rare. The Fair Tax Act of 2023 would replace the IRS with an Excise Tax Bureau and a Sales Tax Bureau operating within the Department of the Treasury. The federal expense for these two bureaus would likely be less than is currently required to fund the IRS. Presumably, some IRS employees could transfer their employment into either of these two bureaus.
At present, the U.S. has the lowest income tax rates and sales tax rates when compared with other countries. If the U.S. were to adopt a national sales tax at 23% that rate would still be lower than the national sales tax of most European countries, which varies anywhere from approximately 40% up to 56%. Ouch!
The downside of a national sales tax, which is the same downside of our current income tax situation, would be the potential change to higher rates. Would instituting a national sales tax curb the federal government’s insatiable appetite for wasteful spending? Not likely, since our legislators and all the alphabet department heads seem incapable of paying down our national debt or operating on a balanced budget, as well as being obsessed with endlessly printing the equivalent of Monopoly money.
Death and taxes being inevitable, I can’t help thinking that the less government poses a burden to we the people the better. I’d rather pay a national sales tax for what I choose to purchase than having the feds grab my money out of my paycheck before I can even see it in my savings account and then have to spend hours filling out my yearly income tax forms, or paying someone to do it for me. “But what about that nice income tax refund check I get every year?” Well, that same amount could have been earning interest in your savings account throughout the year, especially since the IRS takes forever and a day to issue back your own money (without accrued interest).
As someone who has seen the federal government fail to enforce the law to protect my rights and the rights of others, I have every intention of paying as little as legally possible to our wasteful, irresponsible, and unaccountable federal government. So count me in as a supporter of a national sales tax that gives me the ability to pay taxes based solely on how I choose to spend my hard-earned money. I just hope I live long enough to see a fair and reasonable national sales tax finally pass into law.
Paulette J. Buchanan is a former educator and college professor. In 2020 she spoke on Cults and the Law at the International Cultic Studies Association/University of Tennessee’s Nashville conference. In 2019 she spoke on Legislative Action at ICSA’s Santa Fe conference.
Buchanan’s book Fighting for Justice: Religious Fraud, Mental Illness, and the Collapse of Law & Order describes her lifetime of abuse caused by her four older brothers, including their weaponization of the court system to file meritless lawsuits against her and many others. She finally obtained long overdue judgments and injunctions to put a stop to their lawsuits.
For more information and to purchase Paulette J. Buchanan’s book, Fighting for Justice: Religious Fraud, Mental Illness, and the Collapse of Law & Order, please visit her website www.fightingforjusticebook.com, or order her book on Amazon https://www.amazon.com/Paulette-Buchanan/e/B09N4ZBGY2%3Fref=dbs_a_mng_rwt_scns_share.